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Business News/ Companies / Infosys executives consider declaring results from Palo Alto

Bengaluru: Vishal Sikka’s desire to project Infosys Ltd as a next-generation services company has made senior company officials consider if the company should declare results for a quarter during the current financial year from its Silicon Valley base. The move is expected to help the management showcase the presence it has built in California’s Palo Alto, since the company appointed Sikka as chief executive officer last August.

For now, the management at the Bengaluru-based company is still to decide when it intends to hold the results meeting from Sikka’s base station—the Infosys boss and many of his senior colleagues are stationed at Palo Alto. This will be the first time any homegrown technology firm declares its numbers from the US.

“As part of the rotational policy (of holding results from different development centres), we are not limiting ourselves to just India," said one senior executive, who added that even holding it from “Palo Alto remains on the table".

The executive did not want to be named as Infosys is to announce its fourth-quarter earnings on 24 April in Chennai.

Infosys declined to comment for this story.

For the first time since Infosys got listed in 1993, the board of India’s second largest software exporter will meet outside its home state of Karnataka when it declares its results later this month. “(Since Sikka took over as CEO) we have been working towards (being) a more innovation-led company," said the executive. A second executive said, “We can show the investments made in partnering the start-ups and other areas when we are here (at Palo Alto)."

To be sure, Infosys in the last eight months has got some of its senior leaders to be based out of US, which accounts for 60% of the firm’s $8.3 billion revenue.

Palo Alto is increasingly emerging as “the nerve centre" of the 34-year-old company, with seven of Sikka’s former colleagues from SAP SE stationed out of Silicon Valley, according to some experts.

These include Abdul Razack, head of platforms, Navin Budhiraja, head, architecture and technology, and Kaustav Mitra, who was hired earlier this month and has been tasked to help Infosys woo start-ups working in disruptive technologies in Silicon Valley. Additionally, Sikka has got leaders from businesses that operated out of India, including S. Ravi Kumar, as head of delivery, and Sanjay Purohit, who oversees Infosys Consulting.

For this reason, some analysts believe that this thinking of the new management goes beyond just a “cosmetic change of a more US-focused company".

“Vishal’s actions are to show that Infosys now has a strong Silicon Valley presence. It’s a smart differentiator that goes beyond just having an innovation lab," said Ray Wang, founder of Constellation Research. “I don’t think it’s about Infosys being less Indian but it’s about Infosys’s closer alignment to innovation centres around the world such as Silicon Valley".

“Strong Silicon Valley presence is primarily about the best talent pool for innovation—co-innovation, and then also about start up ecosystem and proximity to major ISVs (independent software vendors)," said Wang.

Silicon Valley, the nickname for the San Francisco Bay Area of California, is considered to be the cradle of start-ups focused on next-generation disruptive technologies and home to blue chip companies across sectors—firms from Apple to Ford all have significant presence in the area. For this reason, the region is a powerful magnet for companies across the world.

“Having North American headquarters in the middle of the Silicon Valley ecosystem allows Infosys to tap into the Valley’s rich innovation talent pool as Infosys moves from its traditional labour arbitrage-based model to an IP (intellectual property)-based model," Peter Bendor-Samuel, founder and chief executive officer of consulting and advisory firm Everest Group, wrote in a 2 April note, titled “Is Infosys Repositioning as a Silicon Valley Company?". “Soon to be gone are the days of the factory control from Bangalore dictating to customers how to use services".

For this reason, Infosys’s focus on tapping into the celebrated entrepreneurial and innovative culture in the region could make other homegrown software exporters follow suit, according to Samuel.

However, a Mumbai-based analyst at a foreign brokerage said it’s early days to believe Sikka’s new push in the US is the right approach, especially when the company is trying to get back to industry-matching growth numbers.

“I think it’s more of his (Sikka’s) desire to show that they are doing something when business is getting tough. Here (in the Bay Area) it is not going to be easy engaging with some of the start-ups. Moreover, can you hire the right talent when you are competing against the very best? Bottom line is that everyone judges you how you are doing. And we will see it when the company announces its results (on 24 April)," said the analyst.

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Varun Sood
Varun Sood is a business journalist writing on corporate affairs for the last fifteen years. He also writes a weekly newsletter, TWICH+ on the largest technology services companies. He is based in Bangalore. Varun's first book, Azim Premji: The Man Beyond the Billions, was brought out by HarperCollins in October 2020.
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Updated: 06 Apr 2015, 01:23 AM IST
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